INSUBCONTINENT EXCLUSIVE:
Bloomberg|Aug 14, 2018, 08.52 PM ISTWhile some investors say bargains are emerging, others are selling stocks and bonds.By Paul Wallace,
Netty Ismail and Yumi TesoAs emerging markets take a battering from Turkey’s turmoil, with stocks and currencies near their lowest in more
than a year, investors are positioning themselves to ride out the pain.
Traders pushed down emerging-market securities Monday as Turkish
assets sank, before stabilizing on Tuesday
The carnage added to an already fragile landscape amid tensions between the U.S
and other major economies such as Russia and China
While some investors say bargains are emerging, others are selling stocks and bonds and holding cash.
Here’s what analysts and investors
are saying:
Kevin Daly, a money manager at Aberdeen Standard Investments in London:The almost-$800 billion investment group sold some
emerging-market holdings on Monday to increase its cash positions.Daly sees few signs the Turkish rout will end soon and says emerging
markets as a whole could be in for further pain.“Playing a market like this is difficult,” he said
“There aren’t any obvious safe zones.”Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors Ltd:AMP
increased its exposure to the yen, dollar and Swiss franc because they’re havens during tumultuous timesHe’s short the Russian ruble,
Indonesian rupiah and Philippines peso and says “the risk of a market meltdown is high.”EM currencies might be attractive again if they
fall another 10 percent, he said
For now, the only equities he’s interested in are China’s, given the nation’s current-account surplus and ability to loosen fiscal and
monetary conditions if it wants to.Jan Dehn, head of research at Ashmore in London:The selloff has left emerging markets “replete with
opportunity.”While Turkish assets probably haven’t bottomed yet, it is time to buy stocks, bonds and currencies elsewhere, he
said.Turkey’s problems are “entirely self-inflicted and will not suddenly appear in, say, Poland or Uruguay.”Hans Redeker, global head
of foreign-exchange strategy at Morgan Stanley in London:Investors should short South Africa’s currency against Japan’s yen, targeting
an 8 percent strengthening of the latter to 7.1 per rand from 7.67.“With ongoing weakness in Turkey, investors will have to add hedges in
“South African government bonds remain the top overweight duration in the foreign portfolio
This means foreigners have to buy USDZAR to hedge their bond position and reduce overall EMFX beta risks.”Mark Mobius, co-founder of
Mobius Capital Partners LLP:The turmoil is creating opportunities, including in Brazilian consumer stocks, the veteran emerging-markets
investor said in a Bloomberg TV interview.But traders need to be careful because there’s a “real possibility” Turkey will impose
capital controls, which would be “very, very bad news” for developing-nation assetsChina’s yuan will probably decline even more if
Beijing’s trade war with Washington worsensNicholas Ferres, chief investment officer at Vantage Point Asset Management in Singapore:The
hedge fund has added exposure where there’s been an “emotional overreaction,” he said.Ferres is betting on a rebound in the currencies
and stocks of India and Indonesia and says the dollar’s strength is “well advanced.”Toru Nishihama, emerging-market economist at
Dai-ichi Life Research Institute Inc
in Tokyo:The lira may stay under pressure as issues in Turkey and its tensions with the U.S
have not improvedAnkara’s measures only tweak things in the short term, while nothing fundamental, such as central bank independence, has
been resolvedCould South Africa be hit next because of its weak fundamentals, or Russia as its relations with the U.S
deteriorate, or Mexico where the peso has strengthened on expectations surrounding the new president but no concrete outcome has been
deliveredAsia is probably the most resilient region, but close attention needs to be paid to the yuan
A decline beyond 7 per dollar would be a blow to other Asian currenciesMaximillian Lin, emerging-market Asia strategist at NatWest Markets
in Singapore:NatWest Markets is buying the greenback against Singapore’s dollar and South Korea’s won and says those trades will improve
if there’s further Turkish weakness, though India’s rupee and Indonesia’s rupiah will be hit harderTakeshi Yokouchi, senior fund
manager at Daiwa SB Investments Ltd
in Tokyo:“I don’t see a bottom just yet for the lira and I’ve reduced my exposure to emerging-market assets in general for now”He
raised yen-cash positions; although there may be some risks for financial institutions in Europe due to their exposure to Turkey, this is
unlikely to become a significant global riskFrom a medium- to long-term perspective, the lira may rebound as Turkey offers higher yields,
and when that happens, the turnaround could be quite fastThere is no contagion effect of Turkish Lira fall on India rupee: Khoon Goh,
ANZTurkish lira crashes to record low on worries over economy, US rowDollar firmer ahead of Fed minutes; Turkish lira tumblesTurkish lira
pulls back from a record low, but leaves global markets rattledCommenting feature is disabled in your country/region.From Around The
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